FedEx warns of ‘protectionism’ in foreign airline subsidy fight

FedEx warns of ‘protectionism’ in foreign airline subsidy fight
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FedEx is siding with Middle Eastern airlines in a fight over foreign flight subsidies that has roiled the U.S. aviation industry. 

Unions that represent parts of the U.S. airline industry have alleged Middle Eastern airlines like Qatar Airways, Etihad Airways and Emirates Airlines received more than $42 billion in subsidies since 2004.

They say the payments violate the spirit of the Open Skies agreements between the U.S. and the governments of Qatar and the United Arab Emirates, which own the airlines. 


Memphis, Tenn.-based FedEx said in a comment that was filed with the departments of Transportation and State on Wednesday that the U.S. carriers’ arguments are protectionist. 

“FedEx is filing in this docket primarily to defend Open Skies, not the position of the Gulf Carriers,” the cargo company wrote. 

“However, we are concerned that some of the arguments (and proposed ‘solutions’) against the Gulf Carriers could result in damage to FedEx, the U.S. all-cargo industry or U.S. interests writ broadly,” the company continued. “As the largest U.S. airline presence in the Gulf, we represent the most logical target victim of any retaliation brought on by a U.S. action in violation of its commitments.” 

The fight over the Open Skies agreements has exposed a rift between airlines and travel and consumer groups that argue U.S. carriers are trying to prevent competition for international flights.

Unions that represent U.S. airlines workers have formed campaigns to pressure the Obama administration to question the Gulf carrier subsidies. 

Travel industry and consumer groups have, meanwhile, accused the airlines of trying to reduce competition for international flights. 

The Obama administration launched a review of the airline industry’s claims that FedEx was commenting on, which falls far short of the full-scale international negotiation the U.S. airline industry has called for, in April. 

FedEx said the U.S. airlines are asking the government to prevent them from having to compete with foreign carriers. 

“Despite the Big 3's stated desire to keep government out of the market's workings, they seem to want the U.S. government to guarantee their continued market share, as if U.S. consumers must be funneled to the ‘correct’ choice of a U.S. carrier each time they travel,” the company wrote. 

“U.S. passengers are not assigned by law to U.S. airlines,” the FedEx statement continued. “If consumers want to use a foreign carrier, that should not be a problem that the U.S. government needs to fix, but instead should be a capitalistic challenge for the losing carrier.” 

FedEx said it does not have a dog in the fight over international passengers because it primarily moves cargo, but the company said a decision by the U.S. government to intervene in the Open Skies agreement could negatively affect it. 

“A violation of the existing Open Skies agreement would invite retaliation or renunciation of their agreement by the UAE,” the FedEx statement said. “In either case, as the U.S. airline with the most flights to and from the UAE, we believe that we would potentially be subject to the greatest harm. FedEx strongly urges the U.S. not to take this or any other action on a unilateral basis.

“Looking beyond the situation with the Gulf Carriers, an open and flagrant violation of an Open Skies agreement by the U.S. would undermine the entire U.S. policy efforts to advance aviation liberalization,” the company continued. “If unhappy, existing Open Skies partners would no longer feel the need to comply with the agreements now in place. Those countries considering a new Open Skies agreement would suddenly feel the cold wind of U.S. protectionism chilling their intentions.”